Lawson Products sales decline by 8%
Lawson Products said its net sales for the first quarter of 2012 were $76.0 million versus $82.6 million in the first quarter of 2011.
The Chicago area distributor said the $6.6 million decrease was primarily driven by a decline of $4.4 million in sales within the government segment within bases that support troop deployment.
"During the quarter, we continued to face revenue and expense challenges resulting from the operational issues that followed our ERP implementation in the third quarter of 2011 and weakness in the government segment," said Thomas Neri, president and chief executive officer. "The effect of our operational issues in the third quarter has had a lagging impact on our customer retention. While the first quarter results were disappointing, I am pleased that we have made progress in resolving many of our ERP-related operational issues. Our focus is now on strengthening our customer relationships and engaging our sales force in restoring sales momentum."
Gross profit was $41.3 million versus $49.9 million in the prior year period. The decrease as a percentage of sales from 60.5% to 54.4% was driven by lower freight recoveries, an increase in inventory reserves, and additional temporary labor. Additionally, a deliberate strategic shift toward higher volume national customers with lower margins and higher than normal attrition of smaller customers with higher margins negatively affected results.
Net loss for the quarter was $1.8 million, or 21 cents per diluted share, compared to net income of $2.0 million, or 23 cents per diluted share, in the prior year period.
"We have put programs in place to immediately address the current sales and gross profit trends, while managing our overall operating costs. Many of our recent investments necessarily have been of a long-term, transitional character. We believe the continued investments we are making in our business, including our state-of-the-art distribution center in McCook, Illinois and our revamped Web site will significantly improve our overall customer experience," Neri said.
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